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Saturday, May 23, 2009

GMAC Too Big To Fail?

A lot of folks know just how much money GM has received but did you know that GMAC has received nearly as much. GMAC has gone through several rounds of TARP. They got $6 billion late last year and another $7.5 billion just last week. On top of all of this, Chrysler's financing arm was in such a mess that it was just shut down and now the Obama administration has forced GMAC to take on any of the financing going forward through Chrysler Credit. Now, since Chrysler isn't really selling all that many cars right now this shouldn't be difficult to comply with. Employees were in fact given orders that came all the way from the car czar himself, Steve Rattner, and of course ultimately President Obama that GMAC was to take care of any new financing business of Chrysler credit. Of course, by doing so he also at least temporarily deems GMAC too big to fail. He's given them billions in aid and told them what to do to help orchestrate another part of his plan, trying to save Chrysler.

That's how deeply involved the Obama administration is in the business of the auto makers. Even though he just said this.

Obama is now micromanaging not only the banks but the automakers in this way. Often, of course, he allows his management of both to create a conflict of interest for himself. In fact, the whole entire Obama bailout operation is a series of conflicts of interest.

No one knows the effects on the economy of all these measures however it is clear that all of these measures have allowed the President Obama to amass power even he wouldn't have had without them. Apparently, being president wasn't enough power for President Obama so he decided he would also decide which financing company stays and then load it up with cash and tell them who to do loans for.

Does anyone really believe that this is anything but a recipe for disaster? He has taken over major parts of our economy in a naked power grab. Think about what President Obama is really trying to do. Consciously or not, what he is really seeking is more power. When a leader's ultimate goal is to amass power that will only lead to disaster.

Recently, Jim Geraghty wrote about how the Alinsky principle that Obama grew up in was all about this very usurption of power.

“It’s true I might have trouble getting to sleep because it takes time to tuck those big, angelic, moral wings under the covers.” He assured his students that no one would remember their flip-flops, scoffing, “The judgment of history leans heavily on the outcome of success or failure; it spells the difference between the traitor and the patriotic hero. There can be no such thing as a successful traitor, for if one succeeds he becomes a founding father.” If you win, no one really cares how you did it.

This is the presidency we now have. It is one who's primary goal is to cede more power to itself.

The fact of the matter remains that the Democratic Party is and always will be an inherently pro-capitalist party, no matter how much red-baiting the Republicans engage in. And in that vein, Barack Obama, idolized by many, is still "just" a Democrat.

That being said, Obama may not have "wanted" to run the auto industry, but he sure "had" to because nobody else was willing to do it. Cerberus clearly never had any intention of operating Chrysler as a going concern that much was clear when they put Bob Nardelli in charge. That their plan to rebadge Nissans as Chryslers didn't succeed is because they underestimated just how far gone Daimler left it.

As for General Motors, Wagoner's hand picked board of directors would have led the company into Chapter 7 before they fired him. Every day that G. Richard Wagoner remained in charge at GM was like a slap in the face to men like Alfred Sloan and Charles Kettering.

The point is that no President could survive sitting idly by while two of America's largest employers were repeatedly run into the ground by a management that was as entrenched as it was incompetent.

The real problem isn't that Obama's accumulating too much power, its that he's accumulating it and then giving it to Wall Street here personified by men like Summers and Rattner. This isn't socialism, its the exact opposite, its privitization of the Treasury.